Welcome To Options Trading For Newbies


COMMISSION - This is the charge paid to a broker for transacting the purchase or the sale of stock, options, or any other security.COMMODITY



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Options Trading For Newbies
COMMISSION - This is the charge paid to a broker for transacting the purchase or the sale of stock, options, or any other security.
COMMODITY - A raw material or primary product used in manufacturing or industrial processing or consumed in its natural form.
CONDOR - A strategy similar to the butterfly involving 4 contracts of the same type at four different strike prices. Along (short) condor involves buying (selling) the lowest
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strike price, selling (buying) 2 different central strike prices, and buying (selling) the highest strike price. All contracts are on the same underlying, in the same expiration.
CONTRACT SIZE - The number of units of an underlying specified in a contract. In stock options the standard contract size is 100 shares of stock. In futures options the contract size is one futures contract. In index options the contract size is an amount of cash equal to parity times the multiplier. In the case of currency options it varies.
COST OF CARRY - This is the interest cost of holding an asset fora period of time. It is either the cost of funds to finance the purchase (real cost, or the loss of income because funds are diverted from one investment to another (opportunity cost).
COVERED - A covered option strategy is an investment in which all short options are completely offset with a position in the underlying or along option in the same asset. The loss potential with such a strategy is therefore limited.
COVERED CALL - Both long the underlying and short a call. The sale of a call by investors who own the underlying is a common strategy and is used to enhance their return on investment. In the TradeFinder this strategy is short option (covered) using calls only.
COVERED COMBO - A strategy in which you are long the underlying, short a call, and short a put. Often used by those wishing to own the underlying at a priceless than today’s price.

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